Business Credit

Before you take on credit, understand what you are putting up as collateral

Credit is neither good nor bad: it is a tool with a price, a term and collateral. What separates the credit that makes a company grow from the credit that strangles it is almost never the rate: it is the structure, and it is honesty about the real reason you need it. This text explains the mechanism, so you can read a proposal on your own.

01The gap between paying and getting paid

02Receivables: the money is already yours, it just hasn't arrived yet

03An operation designed, not picked from a menu

When this becomes a problem

Your overdraft facility (conta garantida) never gets back to zero. It stopped being occasional relief and became long-term capital contracted at short-term interest. It is one of the most expensive debts a company carries, and one of the least visible.
You advance receivables every month to cover payroll. The cash balances, but the next month starts smaller: part of your margin was already consumed before the sale even exists.
You took a fast credit line with the money in your account within 24 hours and didn't look at the collateral. You found out later that your personal guarantee and your spouse's are in there, and that the family's property entered the conversation.
The credit came in to cover an operating loss, not to finance growth. It postponed the problem by six months and handed it back larger, now with interest.

How it works in practice

Working capital: the money that covers the gap between paying and getting paid

Every company has an interval between the day it pays its supplier and the day its customer pays it. That interval is the cash cycle, and someone has to finance it: the partner, the supplier or the bank. Working capital is credit to finance that interval. It usually comes in a short term and a revolving format, with or without collateral. If it comes "clean", with no real collateral, the bank charges more because, in case of default, it has nowhere to turn other than a lawsuit, and that is built into the rate. It is the easiest line to take out and the easiest to use wrongly, because it doesn't force anyone to explain where the money went.

Receivables advance: you aren't borrowing money, you're getting your own money early

Here no new money enters your capital structure: you swap a 60-day receivable for cash today, at a discount. The cost is the discount rate applied over the remaining term, and it exists even when nobody calls it interest. Two details change everything. First, recourse (coobrigação): in a good share of trade bill (duplicata) discount operations the contract provides for recourse, meaning that if your customer doesn't pay, you do. The credit risk of the debtor stays in your lap. This is not automatic: it is written in the contract, and that is where we check it. Second, the habit: advancing once to take advantage of a supplier discount is management; advancing every month to cover payroll means your margin is financing the bank, not the company.

Credit secured by property (home equity): why the cost tends to fall

In credit secured by property, the asset goes under a fiduciary lien (alienação fiduciária): title stays conditionally in the lender's name until you pay it off. The procedure to enforce this collateral is faster than a court process and, from the bank's point of view, the expected loss in case of default tends to be lower. That is why this line usually comes with a lower spread and a longer term than an unsecured line. It is not a rule: price and term are still set by the bank, case by case. You are not being rewarded for being a good payer; you are trading risk for price. Two practical consequences: the process is slow (appraisal, legal review, notary, registration), so it doesn't work for an emergency; and the property usually belongs to the partner as an individual, which puts the family's assets inside the risk of the operation.

Tailor-made credit: when the operation is designed, not picked from a menu

Structured doesn't mean sophisticated for sport. It means the debt's cash flow was designed to fit the business's cash flow: a grace period that respects the harvest or the construction schedule, a term that follows the asset's return, assignment of receivables from a specific contract as collateral (cessão fiduciária), real collateral, clauses and covenants (obligations you commit to meet, such as keeping a level of indebtedness, under penalty of early maturity). The gain is fit. The price is complexity: it costs more to set up, takes longer, and the contract starts to dictate your decisions for years. It makes sense when the amount and the term justify the work. It doesn't to cover a bad month.

What I do for you

I map your cash cycle before we talk about credit: how long the money sits idle between paying the supplier and receiving from the customer, and what gap the operation really needs to cover.
I separate what is leverage from what is a symptom. If the need is recurring and never goes to zero, that becomes clear in the conversation, even if it means not doing any operation at all.
I translate the proposal line by line: rate, IOF (the tax on financial operations), fees, CET (total effective cost), term, grace period, required collateral, recourse and what triggers early maturity. You sign understanding.
I structure the design of the operation together with BTG's credit desks and present the alternatives possible for your case: working capital, receivables advance, real collateral or a tailor-made structure.
I look at the effect on your personal assets: what the personal guarantee and the fiduciary lien lock up on your individual side, and what that limits in your next decisions.
I compare against the cost of not doing it: using your own cash, negotiating terms with a supplier or contributing capital as a partner are also options, and sometimes they are better.

What credit doesn't solve

Credit buys time. It doesn't fix margin. If every sale comes out with a negative result, new money only makes the company fail faster and with more interest. There is also no free collateral: every guarantee that lowers your cost moves a risk of yours into the operation: the property, the receivable, your name. And I don't approve credit or manage your cash. Whoever decides price, limit and collateral is the bank, within its own criteria. My role is for you to arrive at that table understanding your own numbers and to leave knowing exactly what you signed.

Frequently asked questions

Is advancing receivables debt?

In the accounts it usually shows up as a credit operation, and in your pocket it works like one. You receive less today than you would receive later: the difference is the cost. And if the operation has recourse (coobrigação), the risk stays with you: if your customer doesn't pay the bank, the bank collects from your company. The right question is not "is it debt?", it is "how much does this advance cost, and what will I do with the money that earns more than that?".

Why does the bank ask for my personal guarantee if the company is a limited liability company?

Because the personal guarantee (aval) is precisely the instrument that cuts across that separation. As a rule, limited liability operates in the relationship among the partners and the company. It does not reach a personal guarantee that the partner signed voluntarily, in a separate contract. The exact reach of each guarantee depends on what is written in it and is a matter for your lawyer. By signing the guarantee, you stand next to the company on that specific debt. It is a choice, and it has a price: in exchange, the bank sees less risk and the spread tends to fall. What I do is make that trade-off explicit beforehand, not afterwards.

Is it worth putting up my property as collateral?

It depends on what the money will do and on how much the property weighs in your life. Real collateral is usually the path to a longer term and a lower cost, because it reduces the lender's expected loss. But it concentrates risk: if the plan doesn't go as expected, the asset that was out of the game comes into it. An operating property, the family's home and an income property you could replace are not the same thing. That conversation comes before the rate.

Can you get a better rate than my bank manager?

I don't promise a rate: the bank sets the price, looking at your company's risk, the collateral and the term. What I do is different: I organize the information so the risk is read correctly, I design the operation together with BTG's desks, and I compare alternatives instead of accepting the first proposal. A better price sometimes comes out of that. But the bigger gain is usually not doing the wrong operation.

Before you sign, let's look at the cash

Send me a summary of your cash cycle and of the debts that already exist. The first conversation is a diagnostic, free of charge and with no commitment, and sometimes it ends with "you don't need this credit".

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